what’s the truth about pre 2008 crisis comp in IB ? always heard that was golden age for finance professionals but what does this mean concretely ? how much used to make an AN ? an AS working in IB in total comp?
talking about M&A etc. not S&T (but interesting to know for the latter too)
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From what I've heard entry level pay was about the same, but you could make VP/MD much faster, especially in S&T.
bump
yes, comp pre-crisis was ridiculously high. There are a bunch of dealbreaker threads from that era...for example - Lehman Brothers IBD in 2007 (keep in mind this was 13 years ago):
Associates: average of $311k, max of $611k!
VP/D: average of $568k, max of $900k
SVP/ED: average of $833k, max of $1.6m
holy fuck this makes today look like pennies
For comparison what are VPs/Ds making now? Also, did the salary of MDs fall notably?
Damn also add inflation and that $311k is probably closer to $400k wow
haha idk what kind of inflation you are looking at but more like 315k lol
Not at an EB, but another well-known bank that pays well.
Associate 3’s at my bank generally make between 400-450 so not all that off these numbers.
VPs start in the 450-500 range. Top bucket VP 3’s can clear 700 in a good year.
https://www.osc.state.ny.us/sites/default/files/other/documents/pdf/201…
Thought this looked interesting and may help you as it looks at the growth and decline of bonuses although it does take a broad view on Wall Street in general.
Salaries were generally lower (e.g. analysts made like $60k base, associates made $100k) but bonuses could be multiples of your salary at all levels. M&A and financing fees were also generally way higher and banks as a whole were way more profitable. Good times.
Why did the comp never recover back to those levels? Did stricter regulation play a big part?
have aggregate bank profits recovered to pre-GFC levels?
A multitude of reasons. Regulation is definitely one of them. Banks are required to hold a lot more capital now, and since they were highly leveraged pre-2008 that amplified their returns (and in effect, bonuses). They also aren’t able to engage in as risky of trading (see Dodd Frank)
On the M&A side, you have the rise of boutique shops (e.g. Moelis) that have taken market share from the bigger players and made it a more competitive environment. I would imagine this has had some effect on compensation with more firms capturing market share, though I don’t have data to support it.
is it now moving back up or what’s the trajectory in recent years been like
Look through this document and see for yourself: https://jenner.com/lehman/docs/LARRY%20WIESENECK/LW%2000893-00927.pdf
That's insane. Seems like your typical MD was making 4mil+ back then. Any idea what the ballpark is now?
The standard is more like 1.5 - 3 now.
Jesus... 5.7 mil for an ECM MD
Unfortunate that all of that vested stock became worthless though.
Honestly, I'm too lazy to try to look these numbers up, but I remember coming across a statistic saying that in 2007, the average salary at goldman sachs (not sure if this included only certain divisions) was north of 650,000, which was cut in half after 2008. Definitely inflated pre 2008 by executives, but still eye-opening.
Average comp at certain EBs like PJT is north of 700 grand
Is the same true for private equity?
Quite the opposite PE has been on a tear since the crisis
from my understanding - pre-crisis there wasn’t a 2 years and out culture where everyone was desperate to make the jump to the buyside. sellside comp paid handsomely and was on par or better “prestige-wise”
very interesting. wonder if that trend will ever revert
I’ll get MS for saying this, but PE pre-crisis, was for those that didn’t make it to HFs. A partner at an UMM clearly told me he didn’t make the cut in the HF world and still wanted to do investing so moved to PE. Comp then was HF>IBD>PE.
Feel like even now top HF> top PE when it comes to pay granted both will blow IB out.
One datapoint. Vice chair and a tech group i worked at noted in pre-2000 dot com bubble few years leading up, associates in his group pulled ~2 mil annually.
Group had a completely separate bonus pool sheleterd from the overall proftibiality of firm
Bump
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